Correlation Between RB Food and KGI Securities
Can any of the company-specific risk be diversified away by investing in both RB Food and KGI Securities at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RB Food and KGI Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Food Supply and KGI Securities Public, you can compare the effects of market volatilities on RB Food and KGI Securities and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RB Food with a short position of KGI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and KGI Securities.
Diversification Opportunities for RB Food and KGI Securities
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RBF and KGI is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities Public and RB Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RB Food Supply are associated (or correlated) with KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of RB Food i.e., RB Food and KGI Securities go up and down completely randomly.
Pair Corralation between RB Food and KGI Securities
Assuming the 90 days trading horizon RB Food Supply is expected to generate 56.28 times more return on investment than KGI Securities. However, RB Food is 56.28 times more volatile than KGI Securities Public. It trades about 0.04 of its potential returns per unit of risk. KGI Securities Public is currently generating about 0.0 per unit of risk. If you would invest 1,325 in RB Food Supply on September 3, 2024 and sell it today you would lose (645.00) from holding RB Food Supply or give up 48.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Food Supply vs. KGI Securities Public
Performance |
| Timeline |
| RB Food Supply |
| KGI Securities Public |
RB Food and KGI Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Food and KGI Securities
The main advantage of trading using opposite RB Food and KGI Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Food position performs unexpectedly, KGI Securities can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KGI Securities will offset losses from the drop in KGI Securities' long position.| RB Food vs. Kingsmen CMTI Public | RB Food vs. Hydrotek Public | RB Food vs. Karmarts Public | RB Food vs. KC Metalsheet Public |
| KGI Securities vs. Thai Steel Cable | KGI Securities vs. Tropical Canning Public | KGI Securities vs. RB Food Supply | KGI Securities vs. Eureka Design Public |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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